Closing Bell - Closing Bell Overtime: Former Cleveland Fed President Loretta Mester On What’s Next For The Fed; Top CEO Worries in 2025 1/15/25

Episode Date: January 15, 2025

We kick off the hour talking markets with Victoria Greene of G Squared Private Wealth and Ohsung Kwon of BofA Securities, analyzing today’s key trends. Our Leslie Picker provides critical takeaways on banks, setting the stage for tomorrow’s earnings. Former Cleveland Fed President Loretta Mester shares her take on CPI data, the Beige Book, and Fed policy, while Evercore ISI's Krishna Guha offers a deep dive into market strategies. Simon Freakley of AlixPartners discusses CEO priorities and challenges in 2025, including their biggest worries. Our Diana Olick reports on how LA wildfires are driving demand in the REIT sector, with insights into upgrades and trends for key players like Essex and Avalon Bay.

That bell marks the end of regulation. Consolidated Edison ringing the closing bell at the New York Stock Exchange. Charlton Aria Acquisition Corporation doing the honors at the Nasdaq. Stocks closing out their best session since the day after the election. The Bulls breathing a sigh of relief as inflation heads in the right direction and banks kick off earnings season on a high note. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, coming up this hour, Cleveland Fed President Loretta Mester gives us her first take on today's inflation print and what it means for the Fed's timetable. Plus, Evercore ISI's Krishna Guha on the market reaction and where he thinks stocks head from

here. And we'll talk about the big moves for bank stocks. And look ahead to reports coming tomorrow from Bank of America and Morgan Stanley. Let's get straight to the market. And this rally with G-Squared private wealth CIO and CNBC contributor Victoria Green and B of A securities director of equity strategy, Osung Kwan. Guys, good afternoon. Victoria, you're generally positive on the markets, especially, I guess, after this cooler CPI print. We can look at fundamentals, you say, but on earnings, you say afternoons have been rally killers. Here we sit

in overtime in the afternoon. What do you mean? I was so happy to see the rally hold. The January has been ugly in the afternoons, right? We've had so many mornings start off on a bright note and then, I don't know, the markets take a break at lunch and don't come back or something? But we've seen these rallies tail off time and time again this year. So for me today, it was so nice. We had that midday dip and I was like, oh my goodness, here we go again. You know, S&P almost downed like 1% gains. And so to see it rally out, I think that's a huge sign of confidence in this rally still intact. And we finally had earnings to focus on, not macro, not Fed speak, not politics. It was earnings to drive it. And to me, we had this dead period where all it was was kind of

data drops and Fed speak. And now we can focus back on fundamentals, company profits, and boy, did they deliver. Well, Osang, speaking of earnings, you emphasize the importance of earnings right here in testing the market's optimism. I'm curious how much leeway you think the investors are going to give global companies with this strong dollar and what it's going to do to guidance. To me, I'm sorry, that was for Osan. Oh, sorry. Yeah, thanks for having me today. And I agree with Victoria that this earnings season is going to be crucial. We finally have fundamental data to really test whether that post-election optimism was real. And I think it was real.

We think that companies are going to deliver earnings. We're expecting a 2% beat versus consensus. And more importantly, I think the tone and sentiment is going to be more upbeat from companies versus a couple quarters ago. And I think December really marked the beginning of a cyclical upturn in manufacturing for two reasons. One is because companies are pre-ordering, as you speak, because of potential tariffs. I think that's really going to kickstart a restocking cycle of inventories after two years of destocking cycle. And number two, we all know that there was a post-election surge in consumption. So those two

things combined, I think that's going to provide a lot of cyclical tailwinds for earnings. And I think companies are going to deliver. Victoria, it does seem like that. And I realize bond yields have been a focus. Those have come down a little bit, at least towards the front end. Earnings and earnings guidance, the banks sort of set the stage nicely today. Semi stocks, which have swooned, those have also been coming back today. Bitcoin back above 100K. All of that is working perhaps in the broader market's favor, but you still have all this fiscal uncertainty. And that seems to be kind of the big negative thing potentially that people, or uncertainty, I'll say, that people are focusing on here. We sort of get another taste of it tomorrow when Besant, the Treasury pick for Trump, testifies in front of the Senate.

How how large is that overhang? How much uncertainty comes with those fiscal policy possibilities? Sure. I think everybody's a little nervous what next week is going to bring and how aggressive this administration is going to be. What are the priorities and are we going to be focused on cutting debt and cutting workforce? Are we going to be focused on cutting debt and cutting workforce or are we going to be focused on cutting taxes and reducing regulations? You have these push-pull and everybody is nervous of how many of these levers are we going to pull at the same time, you know, and how aggressive are tariffs going to be? And so we got, again, good news a little bit on the tariff front, maybe a slower rollout. So we're looking around all of this and saying how economically friendly is this administration going to be focused on versus potentially how much are they going to be trying to fix systemic problems

like the rising deficit and the debt? Because again, we see that push-pull. If suddenly the U.S. government is the largest employer in the United States, if we suddenly see a huge workforce reduction, you could see that labor market get a little bit tougher, unemployment rate come up, government expenditures, large part of GDP. If we see a large reduction in that, again, we could see some struggle growing GDP, which could then outweigh if we don't get our tax cuts in this business-friendly environment. So for us, it's let's see what the focus of this

administration on. Markets are betting. The banks are saying. Everybody's saying, look, we're going to have lower regulation. No oil and gas is loving it. Banks are loving it. We could see a big overhaul on that. But that doesn't necessarily reduce that overhang. You know, oil and gas is loving it. Banks are loving it. We could see a big overhaul on that. But that doesn't necessarily reduce that overhang. You know, who's who are we? How are we going to tackle the deficit? And are we actually going to, like, delay the debt ceiling? All of these things out there, I think we're going to be a little bit on pins and needles the first 90 days until we really figure out the priorities. OK. Osang, I want to go back to something you were just talking about. And that is the fact that you think manufacturing has actually turned here. It speaks to perhaps this rotation or this broadening out we've seen in the market, what that means with the stage set here for earnings.

What do you like going into this earnings season and through the rest of the year? And what are some of those key metrics that are going to guide you? Yeah, I think the manufacturing downturn over the past two years, that was really one of the biggest reasons why the market was so narrow, because a lot of companies who are tied to manufacturing, they haven't been delivering earnings growth. If you look at consensus numbers, by Q4 of this year, 95% of companies are expected to post positive EPS growth. And I think the narrow earnings growth over the past two years was the biggest reason why the market was so narrow. As earnings start to broaden out, I think the market is going to broaden out as well. I like financials. We just saw great results from the

big banks this morning. Short cycle industrials who are also tied to the manufacturing cycle, who have been in a downturn over the past two years, I think they are also going to see an inflection point this earnings season. Well, we'll see if the others can hit that mark that the big banks did. Oh, Son, Victoria, thank you both. Victoria, great to have you here. Good to be here. Well, let's dig deeper on the banks after a strong showing this morning from Citi, Wells Fargo, Goldman Sachs and JP Morgan. Investors now looking ahead to reports tomorrow from Morgan Stanley and Bank of America. Our Leslie Picker joins us now. Leslie? Yeah, John, they're clearly extrapolating what they saw today for the numbers tomorrow. The numbers today giving a boost to the bank's

reporting tomorrow. Morgan Stanley and Bank of America up significantly, up about 4.5 percent and 5.3 percent there. The upside in capital markets has been a big theme for bank investors. And that case was proven out through the four reports today. Wells Fargo CFO Mike Santamassimo telling CNBC earlier that he's seen a confidence shift post-election. I think there's a sense of optimism. There's a sense of confidence. You know, when you talk to customers about their willingness to entertain maybe transactions that they hadn't, you know, been willing to entertain maybe just even a year ago. You know, whether it's, you know, again, you know, working through some of the hurdles to getting deals closed or their confidence that demand will be on the other side of a deal in terms of their customers. Now, that C-suite psychology may not necessarily carry over to

loan growth. J.P. Morgan CFO Jeremy Barnum saying today that given the improvement in business sentiment following the election, you might have expected to see some big loan growth. But he said they're not really seeing that. He thinks that's partially explained by healthy balance sheets across large corporates that have already tapped the capital markets, as well as maybe some residual caution related to policy uncertainty, guys. And Leslie, what does that mean for some of the smaller banks, not even, they might be big, but just smaller than these first ones reporting, that rely more on loans as a part of their business? Could the best part of the financials earning season have come in the beginning? Yeah, I know it's a really critical point, John, because these are banks, the ones that we're covering today, the ones that we're covering tomorrow. They're known as universal banks. So they make a lot of revenue, a huge proportion of their total revenue from kind of Wall Street jobs, things like sales and trading and investment banking.

Less of a reliance. Even Wells Fargo has been investing more in areas away from kind of that traditional lending model. And you've seen pretty much across the board that loan growth is very stagnant to negative over the course of 2024 and especially in the fourth quarter as rates have remained higher for longer, especially what you're seeing with the market rates. Even though the yield curve has steepened, that demand has not yet really come to the forefront to help boost kind of that part of the business. So that will be an important dynamic to pay attention to when the regionals start reporting toward the end of the week. Okay. Leslie Picker, always great to get the context from you. Appreciate it. With the banks helping to power a strong rally for the major

averages, best day for the major averages since the day after the election. Now let's bring in Senior Markets Commentator Mike Santoli. He's putting today's bounce into even broader context. Mike. Yeah, Morgan, and certainly a very strong, very broad rally today. It was about 85 percent of all volume in the New York Stock Exchange was to the upside. You did close not too far from the high. So it checked off a lot of those boxes to say that this was a real healthy move higher.

But you see, it basically just brought it right up to the S&P 500's 50 day moving average. That 50 day average is kind of flattened out, which only means what you can see on the rest of the chart, which is the market has been going kind of sideways for two, two and a half months here. As a matter of fact, Monday's low was essentially the low or really the close from Election Day. So right before you got that post-election pop when you had the decisive result in favor of President-elect Trump. So it's arguably what we've done here is protected that whole range and said, OK, that's probably your floor. You got some relief on yields. A lot of the things that needed to happen did happen. And now we get to enter earnings season. Volatility has come in.

But this is still going to have people thinking that there's more kind of to be proven on the upside. Now, in terms of sentiment, this 5% peak to trough pullback that we've had in the last several weeks has taken some of the bullishness out of the sentiment picture. This is the investors' intelligence bulls versus minus bears,

so the spread between optimists and pessimists over the next few months. These are professional financial advisors, advisory services, And it really did plunge to a spread of about 10 percentage points, well below what the normal bull market range is, which would be kind of, you know, above 20 or thereabouts. So you'd want to see both this come higher as the market maybe gets its footing to say that we're not in a total trend change or the risk appetite, you're not going to come back. That plus you want to start seeing, you know, some momentum signals in the market as opposed to just, you know, one of these oversold bounces like we got today.

You talk about momentum signals, but how important are technical levels here, too, especially for some of those, dare I say, early indicators, whether it's high yield or whether it's the semis, et cetera, for some of those ETFs and some of those parts of the market? Yeah, I think, Morgan, it's a little bit indecisive. I mean, you wouldn't necessarily say that the bull market has lost the benefit of the doubt here, but semis have flagged for quite a while. The one place in the market you would say still says it's risk on is credit markets. Credit spreads remain very, very tame, and they also tightened up today. That's a good thing. Volatility readings coming down are a good

thing. Also, industrials didn't really participate to the upside today, but they have been OK. Consumer cyclical is still where it's at relative to Staples. By the way, Staples, really messy, ugly downside action again today, and that's a defensive group yeah all right well mike we'll see you again in just a little bit after the break former cleveland fed president loretta mester on whether today's cooler inflation number gives the fed a more clear path to cut rates again this year and later evercore isi chairman krish naguha on what the market has been getting wrong about the inflation story in these early days of 2025. Overtime is back in two. Welcome back. Markets closing sharply higher after this

morning's December inflation report showed core inflation came in slightly less than expected. So what does this mean for Fed policy this year? Joining us now is Loretta Mester, former Cleveland Fed president and a CNBC contributor. Loretta, it's great to have you back on the show to talk about this. That is where I want to start, is the CPI report we got this morning, because it really was the month-over-month core CPI reading that helped spur this rally in the market. And yet, in general, we have been seeing the pace of inflation pick up and stay very sticky above the Fed's intended target for a number of months right now. So how does that position the Fed at a time where already investors are expecting we could have a holding pattern? Well, I don't think that today's report on inflation changes that much in terms of the main theme.

I do think that it takes out some of the scarier scenarios on the upside on inflation that the markets were worried about, and I think that might explain some of what you're seeing in the markets. But, you know, if you look at the economy overall, right, economic growth and the labor market are quite strong, and inflation progress has stalled. So the FOMC needs to be really focusing on how the economy is evolving over the medium term, not looking at every little data report and changing its view on the economy based on one report.

Those monthly data reports can be very volatile. And so there wasn't really much in the report that would say change your view that, you know, we don't really need to be cutting rates at this point. And let's give it some more time so we can assess where the economy is and where it's going. And, you know, one of the things that we saw when they started cutting in September, they were really thinking about, they were worried about the labor market. They basically had concluded that inflation really has made a lot of progress and they were more confident it was on that path to back to 2%. But some of those, you know, the data reports that we got in the summer towards the fall were a little weaker than they wanted to see. And they were worried about that. What happened, though, of course, is those reports were revised up. And the subsequent reports show a labor market that is very, you know, really healthy. And so concerns about the labor markets have been revised away. And what we have instead is concern that maybe the progress on inflation is stalled. So there really isn't a reason looking at either side of the mandate, employment or

price stability, that the FOMC would want to cut rates at this point. I think it's better for them to wait and assess things. And it doesn't cost them much to do that at this point, given how strong the economy is. So given that, what is the bond market telling us right now? And I ask that knowing that some of the larger moves higher we have seen in yields in recent days and recent weeks have been at the long end. Well, a couple of things, I think. I think the bond market is reading the economy as being strong. And so they're projecting, you know, we have a strong economy. We may get fiscal policy in order under a new administration and potential growth may be going up. We've seen productivity growth higher. So they may be saying, you know,

we have a higher potential growth rate economy now. Coupled with that should be a higher, you know, normal interest rate or neutral interest rate. And so that's part of it. Part of it, I think, is uncertainty about inflation. It may not be the inflation expectations are higher, but I think there's more uncertainty about the path. And that feeds into term premium and those bond yields. So I think it's a combination of things. But I don't think they're wrong.

I think that we just have to wait and see what is the path for economy, what in particular is the path for inflation, and whether the Fed needs to change the narrative that it's been having, which is we're going to bring rates down further, or whether really that normal, neutral economic equilibrium interest rate is higher than they think, and therefore policy is less restrictive than they think. So along those lines, if you're at the Fed right now, what's the biggest wild card that you're watching in 2025? Is it the impact of Trump policies like tariffs, like deregulation, like immigration? I mean, some were factoring that into their projections. Some were not. Is that are you waiting for the data to show you what those policies are actually doing? And is that the biggest question? Yeah. I mean, I think there's

a lot of still uncertainty around what that package of fiscal policy will look like in the timing. But I would think at this point, they should be evaluating different scenarios so that they're ready once we have more clarity around it. They can't really wait until the policies actually have the impact on the economy, but they can wait until we have more clarity on what those policies are going to look like. And it really matters in terms of what you think those policies are going to be on inflation and employment. My own view is that if the more probable path will be that in the shorter run, there'll be inflationary, add to inflationary pressures. If you think about

what could happen in the labor market, if there's a true restriction of immigration. But we don't know because we don't know how much they'll be able to pass nor where it's headed, whether it'll be done gradually or being done sort of all in time. So I think you have to start thinking about the impact of those potential policies, but you can't really react to them until you have more clarity. So it didn't surprise me that several of the participants in FOMC had penciled in, and penciled in is the important thing because you can erase it later in your nextC had penciled in, and penciled in is the important thing because you can erase it later in your next projection. Penciled in something for those policies,

but I don't think they have to take a stand yet, but they have to be thinking of different scenarios. So I think it's very appropriate for them to be doing that at this point. Well, the action starts next week. Loretta Mester, thank you. Thanks. Up next, Evercore ISI Vice Chairman Krishna Guha weighs in on the big rally,

the pullback for yields, and why he says the market has been getting the inflationary story wrong this year. And we're looking ahead to the Senate confirmation hearing that perhaps matters most to Wall Street when Treasury Secretary nominee Scott Bessent faces lawmakers' questions on the economy. We're going to preview the top issues that are at play. That is all ahead on Overtime. Welcome back. A rally day on Wall Street as a cooler inflation print sent the bulls running wild. Two sectors outperformed the pack.

Communication services climbing 2.6 percent, boosted by big gains for Meta, Alphabet, and Netflix. And consumer discretionary up around 3 percent, led by Tesla, Airbnb, and Mohawk Industries. And for more on this market rally, let's bring in Evercore ISI Vice Chairman Krishna Guha. Krishna, good to see you. So you heard Loretta Mester here on Overtime just moments ago. Now, she sounded a little iffy on the need to cut to immediately, even after this tame CPI inflation print today. You think the Fed needs to remain in cutting mode? What are the implications for investors? So, look, standing back, I think the really big thing is since the beginning of

this year, just a few weeks, but we've had this big inflation and rates scare. I think we traded a long way on pretty thin data. And what the actual news we got today, inflation, not as strong a spirit in the US and for that matter, not as strong a spirit in the UK either. So I think what the market is waking up to is, you know, there really actually isn't a lot more grounds to be concerned about the inflation process now than we thought was the case in the final weeks of 2024. Does that mean the Fed needs to rush to cut? Absolutely not. But does it keep the Fed on a pathway where the data is consistent with delivering a couple of cuts this year? I think the answer to that is yes.

And I also think it's still possible that the first cut could come in March. Now, not perhaps over 50 percent likely, but more likely than the one in four the market's pricing right now. What's the impact of the strong dollar? What does this environment say about international markets that investors should be paying attention to? And I've got an eye on India, which did very well in twenty twenty four, but is trading near the low levels of where it did in twenty four. So look, the strong dollar is just a giant wrecking ball as far as all the other currencies in the world are concerned. So not just the weak performers, but even the relatively strong performers outside of the U.S. Nothing can stand in the way of the dollar.

And it's because the U.S. economy is performing strongly. We are expecting, of course, fewer cuts from the Fed now than was the case, you know, say three, six months ago. And of course, you know, the strong dollar is kind of robust to different versions of what we might get from President Trump. If we go max-maga on tariffs, an unconventional policy, that'd be dollar stronger. But if we go through the more conventional pro Wall Street business-friendly route, well, that's going to pull foreign capital into the U.S. That's also a strong dollar. So, of course, there could be a relief, a rally in some of the other currencies near term next week if President Trump is less

aggressive than feared straight out the gates. But I do think strong dollar is a really powerful theme right now on a global cross-asset market basis. Christina, what do you make of the fact that we've seen this, I'll call it a quiet climb in crude oil? And I realize from a Fed perspective, when they're looking at CPI, they strip that out. But we also know when you see energy prices go up, in general, it tends to start to ripple into other areas of the economy. You're right. That's something that we should be paying attention to. There is a hint of stronger growth. And of course, we did have that and potentially renewed tightening post-election. Very clearly, if the labor market actually tightens on a consistent basis with falling

unemployment, the Fed is not going to be cutting until things stabilize. With respect to oil, I think there are some issues, of course, also potentially on the supply side, some cracking down on Russia's shadow fleet of tankers. There's issues about where do we go with Iran sanctions under a Trump administration. So there's probably some supply as well as some demand factors in there. But it is certainly worth keeping an eye on, both in terms of information about growth and also, of course, inflation pressures. All right. Krishna Guha, thank you for joining us. Thank you.

It's time now for a CNBC News update with Kate Rooney. Kate. Hi there, Morgan. President-elect Trump's pick for Secretary of State Marco Rubio called today during his Senate confirmation hearing for an end to the war between Ukraine and Russia. He said both sides will have to make concessions to agree to a ceasefire. He said he would urge European counterparts to rely less on the U.S. and spend more on security. Meanwhile, former president of Brazil, Jair Bolsonaro, said today he has been invited to President-elect Trump's inauguration,

but for now, he can't go. Bolsonaro does not have his passport because it was confiscated last year amid a probe into the country's 2023 coup. He is facing criminal charges for allegedly plotting that uprising. And for the first time in about five years, borrowers who have defaulted on their student loans will face garnishments of their wages and retirement benefits. In a Department of Education memo obtained by CNBC, The garnishments could resume as early as this

summer, according to the agency. As of 2022, about 7.5 million borrowers were in default. Guys, back over to you. Okay, thanks. Well, up next, Morgan just mentioned it. We'll put the pop for crude into longer term context and look at how it tracks with other commodities. And later, one eye on Wall Street, one eye on Washington. We'll look at how corporate leaders are adjusting their plans around tariffs, China relations, and social issues with just days to go until the new Trump administration takes office. We'll be right back. We have breaking news on Hindenburg Research.

And Christina Parts-Navalis has the details. Christina. Well, Hindenburg Research is no more. The New York-based investment firm did confirm in a letter that they will be disbanding as of today. This is according to the founder, Nate Anderson, who founded the company back in 2017. You may have heard of the company because they put out reports alleging corporate fraud as well as malfeasance. In a letter, Anderson said there was no reason to disman, no health threat, no big personal issue, but did write, quote, someone once told me that at a certain point, a successful career becomes a selfish act. Anderson plans to open source the

firm's investigative methodology and share his knowledge through materials and videos to empower others in the field. And those are the names you're seeing on your screen that they've written reports and shorts about. So a familiar name, but no more. He says that he's going to focus on finding jobs for the people that work in the office, some who will be creating their own investment firms. Back with you guys. Okay, Christina, thank you. Thanks. Well, oil prices continue to move higher on the back of U.S. sanctions against Russia. Prices hit their highest level since August. Mike Santoli is back to put that into perspective. Mike? Yeah, John, obviously a pretty aggressive move just here in the last couple of months,

but the three-year chart suggests why perhaps the rest of the markets are not totally alarmed by it. It still has not broken containment. You see WTI crude is the blue line here. That was the invasion, Russia's invasion of Ukraine. That's when it really burst higher. We're basically just flat from before that invasion. And HG, of course, is copper. Put that in there for comparison of another kind of vital commodity, basic commodity that has also been kind of flatlining for a while. This does not suggest massive global demand for raw goods. So for now, this is a fairly acceptable situation. Obviously, if it does, in fact, burst higher, start making new highs,

it's going to be a concern. But keep in mind, incomes are much higher over the last three years, the size of the economy higher as well. So take a look, though, at the stock sectors that are levered to these things. XLE, of course, is the energy sector, has really held its value very well, despite the fact that from this point, crude oil prices are lower. Of course, they have refining operations and more diversified. Exxon and Chevron themselves are more than a third of the XLE, and they're very stable businesses. Net income is about flat over the last three years. And then you have basic materials, which really has struggled. Those companies, a lot of the chemical companies, more levered to global demand and global manufacturing, which has been somewhat in the

dumps, guys. I seem to see a lot of holding patterns in a number of things as we get ready for this second Trump administration to start, talking about the levels in the S&P or, you know, you're talking about the chart you just showed about what crude is doing. Yeah. And especially these things are much longer term sideways patterns. You can talk about the Russell 2002, which really has not gotten escape velocity above its late 2021 levels. So it really does show you that the S&P owes a lot to the AI boom and the mega mega cap tech stocks that have managed to paper over this period when global manufacturing was really in a bit of a slump. And in fact, one of the bullish cases for this year is that the rest of the old economy starts to kind of wake up and broaden out that earnings

growth. We'll see if that happens. OK, Mike Santoli, thank you. Up next, the executive chairman of consulting firm Alex Partners on the top concerns facing CEOs this year and how they plan to combat those fears. And Intuitive Surgical, one of the big winners of the S&P 500 after announcing much stronger than expected preliminary fourth quarter and full year revenue thanks to a jump in robotic surgeries. We'll be right back. Welcome back to Overtime. We are five days away from the Trump inauguration and business leaders are planning for a very different environment. A new survey from global consulting firm Alex Partners says CEOs are predicting major business shifts in 2025, including adjustments from tariffs, U.S.-China relations and the growing cyber and data privacy threats.

Well, joining us now is Simon Freakley. He is executive chairman at Alex Partners, a global consulting firm focused on turnarounds and disruptions. And it's great to have you here on set. So welcome. Thank you, Aubyn. Thank you, John. Thanks for having me. So this is exactly where I want to start, because you did just put out this survey and basically a lot of uncertainty, a lot of volatility. And yet it also seems like a lot of CEO confidence in the face of it. Why? So look, the survey data was gathered before we knew the result of the presidential election. The biggest concerns on people's minds were taxation and regulation. We ran a mini-survey of 500 executives after we knew the result. Taxation and regulation fell away as a concern.

Tariffs are now the biggest question in the US. But the biggest takeaway from our sixth survey, 3,200 executives in the major economies of the world, is they're getting more confident in their ability to capital capitalize on the opportunities coming out of these multiple disruptions rather than feeling overwhelmed by them, which they were a few years ago. And I do want to get into some of those disruptions and what that looks like and what that means, especially, you know, in the face of AI and these new technologies and innovations. But first, just one more question, because tariffs are very much and trade policy is very much in focus for C-suite, for the markets and investors as well.

I was just at the ICR conference earlier this week. And one of the takeaways for me was that some of the executives of consumer facing companies there were making the case that they've already been moving some of their supply chain away from China, given what we've seen with tariffs, given what we've seen with pandemic over the last couple of years. So maybe it's a different dynamic and maybe perhaps not so disruptive, depending on your company and your industry this time around. Morgan, I think that's absolutely right. I think coming out of the pandemic, people realized they needed supply chain strategies that were just in case, not just in time. So I think they developed second and third options in supply chain. But I think particularly with tariffs in mind coming into a Trump presidency, people anticipated this could be a problem. They started to stockpile certain things. They started to find different routes to

get critical supply. So I think people are somewhat ahead of the game. But of course, people just don't know how big a disruption this is going to be. They don't know what the impact on their business is going to be. And they're trying every strategy they can to mitigate it once they know exactly what it is. You're talking to global CEOs. Yes. Are you seeing much difference depending on where that CEO is based, where that CEO's largest customer base is? Absolutely, John. So what we're seeing in the U.S. that over six sets of disruption surveys, the disruption in the US seen through the eyes of US CEOs is seen to be about the same as it has been for the last couple of years. In Europe, in EMEA, CEOs are feeling much more disrupted.

Why is that? Well, obviously, Germany and France, their governments lost no confidence vote. A new government in the UK displacing 14 years of conservative rule. Immediate impact of the Russian invasion of Ukraine and the long-lasting impact on supply chains there. So the anxiety, the disruption in Europe has gone up. In the U.S., it stayed the same. Interestingly, in Asia, it's gone down. And so it's not a one-size-fits-all. Is that unusual to see the level of difference between, say, the U.S. and Europe that you're seeing now?

It is a little unusual, but I think seen through a geopolitical lens, maybe maybe it's not counterintuitive. I think there's been so much political dislocation in Europe that anxiety is playing out in the corporate sector. There hasn't been the same growth, of course, in Europe over the last few years. There has been in the U.S. So there isn't quite the same confidence or the same momentum. But it was surprising to us that it was so pronounced. AI, how is that factoring in now? Well, so interesting, Morgan. Of course, one of the reasons that CEOs, global CEOs, American CEOs also are feeling more confident

is that they're seeing AI and automation and robotics as being a real opportunity, not just for cost cutting. You know, we're all familiar with the stories of how to cut down the cost of call centres and how to get administrative functions trimmed down with AI. They're now really leaning into AI to drive revenue growth. They're leaning into robotics and automation to augment productivity in a way they can't solve the problem through human capital. So the marrying of automation and robotics with human capital to get greater productivity, the use of AI to drive revenue, not just mitigate cost, and making CEOs feel more optimistic. Simon Freakley, thank you for being here on set of Alex Partners.

Thank you very much. Great to have you. We've got a news alert on TikTok. Julia Boorstin has the details. Julia. John, President-elect Trump is considering issuing an executive order that would suspend the enforcement of the TikTok sale or ban for 60 to 90 days. Now, that's according to a report in The Washington Post. Now, the ban on TikTok, if it's not divested by its parent company, ByteDance, is currently set to go into effect on the 19th, which is on TikTok, if it's not divested by its parent company, ByteDance, is currently set to go into effect on the 19th, which is Sunday ahead of Trump's inauguration on Monday, the 20th. The Supreme Court considered TikTok's challenge of the law to ban it last week.

We are awaiting any ruling from the Supreme Court. We are reaching out to TikTok and the Trump administration for comment but if this ban does go through it is perceived as a beneficial um win for meta as well as snap and youtube back over to you john all right we'll have to see if the lights stay on at tick tock julia thanks up next how the devastating california wildfires could impact the real estate industry especially apartment and warehouse REITs. But first, CNBC's senior personal finance correspondent, Sharon Epperson, explains how to simply file taxes with no charge. This year, taxpayers in 25 states are eligible for the free tax filing program IRS Direct File. To qualify, you must have income from W-2 wages,

Social Security, unemployment compensation, retirement, or interest income, and claim the standard deduction. For CNBC, I'm Sharon Epperson. Welcome back to Overtime. The devastating wildfires in California could lead to a surge in demand for apartments, offices, and warehouses as L.A. recovers from this tragedy.

Diana Olick has more. And John, let's start with multifamily. We've heard already about potential price gouging in the L.A. rental market by individual landlords. That is not the message from large apartment REITs. Camden, for instance, announced it is temporarily waiving application fees, offering flexible lease terms and freezing new lease rates. Still, some of the stocks are now seeing upgrades. Alex Goldfarb at Piper Sandler has an overweight on Essex, Avalon Bay and Equity Residential.

There will be some probably some modest rent increases through normal course. But I would expect, and when we come to the earnings season, that other of the REITs will discuss rents and application fees the way that Camden has. But certainly upticks in occupancy are going to fall to the bottom line and drive earnings. Now, office could also see a boost in Goldfarb is upgrading Douglas Emmett. That's for the rebuilding effort. Attorneys, insurers, architects, consultants, a lot of people will be coming in. And as a result, I do believe that they will need office space. And certainly Douglas Emmett with its Westside portfolio fits well for those tenants, especially given that Emmett focuses on pre-built office suites.

And then industrial names like East Group Properties and Terrano could also see increased demand as rebuilding materials start flooding into the area. John? Diana, I want to go back to the housing piece of this specifically because I realize there's a lot that's being sorted out and that's going to take time, but we've talked about insurance and Contessa Brewer I know is there and she's focused on that piece of the puzzle. But then also regulations have changed for some of these properties in some of these areas since they were first built many decades ago. So the rebuilding effort itself, I just wonder if we have any sort of sense longer term what this could do to the housing market, to the demand piece of it, to the rebuilding piece of it, and ultimately to the home price piece of it.

Well, that's going to depend entirely on the individual homeowner, whether they have insurance, whether they are made whole and they decide to stay in the area. Some people, we've heard from several real estate experts in the area from Redfin and from others, that people may just decide to leave that area because they don't want to be in a high fire risk area. Now, if you stay, you're going to have to rebuild to new codes, as you said, that is new fire codes. And that will be expensive. It's going to take a very long time because remember, the big production home builders don't operate in L.A. proper. They're not in the Palisades and Altadena. They're out more in the suburbs of the areas where they build large scale.

So you're not going to have big names like KB Home or something come in and put in a new development. This is going to be individual contractors and builders and designers. And again, that's why so many people are going to have to come into the area. But it's going to be expensive and it's going to take a long time. Tough situation. Diana Olick, thank you. Well, tariffs and tax cuts could be big topics of contention during tomorrow's confirmation hearing of President-elect Trump's pick to run the Treasury Department. We've got details straight ahead. Plus, one giant leap for a lunar exploration. Details on the launch that sent two different landers on trips to the moon when overtime returns.

A successful launch this morning by SpaceX of two commercial lunar landers, one from Firefly Aerospace, the other from Japanese company iSpace. Both are now on their way to the moon. Firefly's Blue Ghost poised to get there first and attempt a soft landing on March 2nd. Blue Ghost is carrying 10 payloads for NASA and plans to conduct a flurry of experiments over two weeks from the lunar surface. Meantime, Intuitive Machines made history with its commercial lunar lander last year and is preparing to launch its second in

coming weeks. But the stock, as you can see right there on your screen, spiked today, finishing up 14 percent after details published regarding its $4.8 billion near-space network contract with NASA for a lunar satellite communications constellation. This is the same award that was first disclosed back in September. And overnight, looking ahead, Jeff Bezos' Blue Origin will again attempt to launch its New Glenn rocket in what will be its first flight. It will also attempt to land its booster. But that's not all.

This time tomorrow, the focus will then shift to SpaceX again for the seventh test flight of the mega rocket system Starship. Now, Starship will attempt its first payload deployment, in this case, Starlink satellite simulators, and SpaceX hopes to attempt to catch its own booster on the launch pad as well. For more, John, manifest space. Of course, of course, manifest space. Well, hedge fund manager Scott Bessent, President-elect Trump's nominee for Treasury Secretary, is likely to be grilled on everything from tax cuts to tariffs during his Senate confirmation hearing tomorrow. Our Megan Casella has a preview. Megan. John, that's exactly right.

So the hearing kicks off 10.30 a.m. tomorrow, and it's really the first time that we'll get to hear from Besset himself on all of these policy areas, some that you mentioned, some others. The committee chairman, Mike Crapo, is expected to focus his questioning on the need to make the 2017 tax cuts permanent. That's according to his office. Democrats then are also preparing questions about tax cuts as giveaways for the wealthy, so a big issue there. Tariffs also expected to be a huge topic. Bessent will want to show support for the president's tariff agenda, but he is also expected to be sort of a moderating influence on trade, so we have to see how he walks that line. The debt ceiling and deficits both likely to come up as well. Bessent has said he was motivated to get into politics in the first

place because of his fears about the size of the U.S. debt. And then there's the Fed. Bessent was the adviser who raised the idea in the first place of a shadow Fed chair. So some lawmakers are likely to want to hear how he views Fed independence. Now Bessent is expected to get confirmed pretty easily, potentially even with some Democratic votes, but that doesn't mean that there won't be fireworks. Senator Elizabeth Warren has sent Bessent a list of 180 questions she would like him to be prepared to answer tomorrow, so plenty to watch there.

Guys. Yeah, Megan, I don't know whether to call it showboating or not, what lawmakers tend to do when they know the TVs are on in a moment like this, but overall, outside of people taking their most cared for issues to the fore, you do expect that this is probably a consensus pick for a lot of people? Absolutely. We've heard Democrats this week calling him one of the most qualified out of all of the Trump picks. We heard Secretary Yellen in her interview with Sarah Eisen talking about how he's quite qualified, has a lot of experience with markets. So on the whole, we expect him to move through quite quickly, but we are going to get him on the record here. He

knows the lawmakers know the cameras are rolling. Besset knows that too, and he potentially knows that his future boss is listening as well. So it's a chance for him to sort of set the tone for how he wants to run Treasury and how he's going to handle all of these really hot button issues, taxes, trade, you name it. All right. Thank you. Not exactly a Tulsi Gabbard situation, Morgan. No, this is one that's going to matter to the markets and certainly sets the stage for next week where I think there is this growing expectation that Trump goes through inauguration and just starts pushing the policy out, the executive orders out, and things get very busy very quickly. I mean, there's absolutely that expectation. You know, the president-elect

has talked about how the first time he didn't know exactly what he was doing going in. Now he's had a lot of time to make some pretty specific plans. And you wonder how TikTok factors into that, given, you know, the saber rattling toward China and how important that is to so many companies. Yes, we're going to be watching that. We start to get more earnings as well. Retail sales tomorrow morning. Meantime, a rally for the markets. Best day since the day after the election for the major averages. That does it for us here at Overtime.